STATE OF NEW YORK
INSURANCE DEPARTMENT25 BEAVER STREET
NEW YORK, NEW YORK 10004

The Office of General Counsel issued the following informal
opinion on March 6, 2000.

Records Retention Requirements

Question:

If Alpha New Yorks (ALPHA-NY) parent company performs
some of ALPHA-NYs financial recording, do the original records need to be kept in
New York?

Is ALPHA-NY required to retain in New York the originals of
the contracts it executes with its Sales Associates?

Conclusion:

Unless ALPHA-NYs Board of
Directors has adopted a plan providing otherwise (and that plan has been approved by the
Superintendent), New York law requires that an insurer keep its original financial records
within New York State.

ALPHA-NY is not required to maintain
originals of the Sales Associate contracts within New York.

Facts:

ALPHA-NY, a New York domestic insurer, is a
subsidiary of the Alpha Company. The Alpha Company takes care of a number of
ALPHA-NYs financial recording functions.

(a) Every domestic insurer and every
licensed United States branch of an alien insurer entered through this state shall, except
as hereinafter provided, keep and maintain at its principal office in this state its
charter and by-laws (in the case of a United States branch a copy thereof) and its books
of account, and if a domestic stock corporation, a record containing the names and
addresses of its shareholders, the number and class of shares held by each and the dates
when they respectively became the owners of record thereof, and if a domestic corporation
the minutes of any meetings of its shareholders, policyholders, board of directors and
committees thereof. If any such records are kept in a language other than English, they
shall be accompanied by accurate translations thereof.

(b) A domestic insurer and a licensed
United States branch of an alien insurer entered through this state may keep and maintain
its books of account without this state if, in accordance with a plan adopted by its board
of directors and approved by the superintendent, it maintains in this state suitable
records in lieu thereof; provided, however, the superintendent may after notice and
hearing direct such insurer to return all or any of its books of account to this state if
such return is reasonably necessary to protect the interests of the people of this state
or to permit their inspection in this state by a director, a shareholder, or, in the case
of a mutual insurer, a policyholder, who has shown to the satisfaction of the
superintendent that he has made an application to such insurer for inspection of such
books in good faith and for a necessary and legitimate purpose, and that such insurer has
either declined to permit such inspection without this state or to agree to pay any
additional expenses reasonably to be incurred by the applicant or his agent or attorney in
connection with the inspection of such books as a result of their maintenance without this
state. If in the judgment of the superintendent delay in the return of any or all books of
account of such insurer may be hazardous, or may cause irreparable injury, to the people
of this state or to the policyholders of such insurer he may direct the return thereof
without notice and hearing.

N.Y. Ins. Law § 325 McKinney Supp.
1999-2000.

As indicated by the above-quoted statute,
domestic insurers, such as ALPHA-NY are required to keep the originals of certain of their
records in New York State. The statute further provides, however, that an insurer may
adopt a plan providing that originals need not be maintained in New York. Such a plan must
be approved by the Superintendent and must provide for the maintenance of suitable copies
or substitutes.

With respect to your first specific
inquiry, it would appear that, absent the adoption of a plan as described above, ALPHA-NY
would be required to maintain its original financial records within New York State. This
is because Insurance Law Section 325(a) expressly includes "books or account"
among the items required to be maintained within New York. Concerning your second specific
inquiry, however, there is no requirement that originals of such documents need to be
maintained in New York.

For further information, contact Senior
Attorney Michael Campanelli of the Departments New York Office.